and there can be no more than .oderate of course, as i mentioned, the determination is always subject to audit by the irs. the rules could require a notice requirement-- to the irs. a procedureuld have as they do with the separate line of business as well as an independent line of contractors, where in fact the two businesses could apply for the irs to make a determination. summarize, the mechanical test used for qualified planned rules are overly complex and understood only by a limited number of tax professionals. a small business can not apply to them without professional help. it is a small set of professionals that deal with these rules and these rules are only going to apply to businesses for a few years.

for that reason, facts and circumstances -- based on who controls day-to-day business is a much more logical rule in the statute or committee reports could list characteristics of management control and taxpayers would be able to make a judgment. -- a judgment as to whether they did --what constitutes what constitutes the employer for purposes. >> thank you, ms. walker. i would like to yield to the ranking member to introduce our last member. >> it is my pleasure to -- she serves at the hub for international insurance services. she provides compliance and consulting services regarding health plans and other employee benefits. regarding health plans and other employee benefits. in insurance by business

insurance and was selected as one of the 25 most influential businesswomen by the st. louis business journal. welcome and thank you for being here >> -- for being here. >> thank you chairman collins, thank you ranking member. i am honored and very happy to be here to be able to give you some comments and testimony on this very important issue. want to have an echo for what ms. walker said regarding some compromises or concessions toward small businesses. i think a controlled test would be a great first step as opposed to a bright line standard. i want everyone to keep in mind as we go through these types of discussions that the type -- that the importance of the employee rule and the control rules, which can cause small businesses to be treated as one employer has impact not as one

employer has impact not among it has huge implications also for the come -- for the practical compliance of the rules. i want to a dress come a specifically, the issues of .omplexity and awareness i think the issue of complexity, as you read through the rules, very quickly you begin to word these arein to learn very complex rules. it definitely requires a tax advisor or corporate planner to a cyst and employer in determining whether they have a controlled group. the level of awareness is low. if an employer has voluntarily decided to create a retirement plan, yes the generally address these issues. of oflayers that are made small groups, they likely have not done this if they have not put in place a retirement plan.

while it is true that insurance carriers ask questions about the employer, they do so not much to do an analysis. a they are asking questions about size so they can put into their programs how cobra should be administered if it does apply. and other technical issues like that. thes not an analysis of controlled group. they are also asking that question as to determine whether they can institute large group or small group policy. we are seeing confusion around that issue. areceived an e-mail regarding small employer in california. they were unable to get a small employer policy because they were considered to be part of a control group by the insurance carrier. they said they were not issued a policy because it would be discriminatory. that same group had a small employer in arizona. that employer was able to get the policy.

they are put into an expensive ppl. ppo. -- expensive we have seen awareness around this issue from small and large employers. they say many times, i wasn't aware of this. we do get comments that are very incredulous that this would even be the case. terms of the additional confusion, there are myths around association plans. unless you have sticky notes within a group that is difficult to put unrelated or even fairly slosely related employer is together, the insurance group will still not group them together. part of that is the practical access to the insurance coverage, which the law, unfortunately, does not

guarantee for the small employers. are there planning opportunities? yes. we see small employers trying to use those to avoid compliance with the law? not yet. i think part of the lack of awareness is a little bit of a reaction to the delays that have occurred. believe there have been delays and those delays will continue. for smaller businesses, there is a sentiment that the rules for the larger employers were delayed, which they were until 2015. however, for the smaller businesses they smell many of them on the brunt of the expensive renewals this year. they offer an early renewal option to renew their policy this december and to delay the cost impacts of health reform. invariably they have taken that offer. they have basically kicked the issue down the road for another year. we will hear more about that next fall.

it is a matter of the law providing access to coverage with no pre-existing conditions. it is not by any means affordable, even for the small businesses. the small businesses are also different. if they are part of the control group, that does not mean there is actual control or authority or even cooperation among the various owners. there is generally no central payroll system, no hr person. they may handle the function at various locations. there are situations where the employer does not have a common point person. their consistency across the group for payroll purposes is very difficult.

touch quickly on participation requirements that insurance carriers have in the small marketplace. the rules under the federal law to reload participation requirements of 70% -- the insurance carrier can require that percentage of the employees to elect the coverage. many carriers require the employer pay a significant percentage of the premium paid sometimes 100% of the cost. the concept that the employer is only going to pay for the coverage based on the 9.5% rule is not the case, not for smaller players and not for large employers. employers are paying significantly more, especially as of the fact that they cannot know household income. the discrimination rules, which have yet to be issued, or a antinuing concern -- are continuing concern. the senior counsel indicated to me that they cannot enforce those rules. it is what we have experienced in actual practice, even when there is an audit they asked to see the testing, check it off their list, and they are done with the issue.

will be extremely difficult for them to do so for small insured plans. and very difficult for the employers to coordinate a nondiscriminatory program across various companies in different industries and states. automatic enrollment, if the group should happen to be about 200 it will be in other serious issue when that takes effect. and then finally me what issues -- miwa issues. they may not be sufficiently related for carrier purposes, they may not issue the policy or the states may consider those iwaups to be an illegal m under state law. it would require licensing as an insurance carrier for those groups and then also capitalization at the carrier and regulation as a carrier.

i think there are many issues that are affecting the smaller employer's awareness, complexity of the rules, but i think the issues around confusion and the year of the smaller employers as to what impact they will feel from the law and what they should do now with the uncertainty without regulations. thank you. >> thank you. ellisxt witness is winstanley. he owns a number of businesses, including restaurants, catering company, software company, and promotional products company. welcome. collins, ranking member vasco's and the house committee on small business, thank you for the opportunity to testify today on the business aggregation rules included in the health care law on small businesses like ours. of trade logic

corporation. i own it for writing small businesses in austin, texas with my twin brother and other partners. i am honored to offer the perspective of my companies as well as other restaurants on behalf of the restaurant negotiation and restaurant food service industry. i am a business executive with a successful track record of starting up, turning around, and .rowing out businesses my brother and i were entrepreneurs that got started in business when we were students at the university of texas. we were known for low rescuing local restaurant grants and turning them around as contributor to the community and job creators. we currently own eight restaurants, which i oversee day-to-day. you are also partnered with our parents in three printing -- and 3-d printing and promotional businesses. we owned software development companies, one is trade logic corporation. presentsh care law compliance and challenges for

all of our small businesses, but particularly for the small restaurants and food operation due to the character is to fire workforce. it is difficult for many restaurants, especially small businesses to determine how the law and taxes and what we must do. employer aggregation rules present a significant competition to our business. it may seem at a simple thing to do but due to the aggregation rules and the structure of many restaurant companies to my determining the employer is more competent than many expect peter austin texas, like many other cities around the country, has a rapidly developing restaurant community. we, like most of the operators we know, participate in multiple restaurant entities with various partners, often with family members. the we consider each operation to be a small business the, each of us are discovering for the purpose of the health care law all of the businesses must be considered one employer due to the aggregation rule. this threatens to stop the development of restaurants in our community. theseplication of aggregation rules is already having an impact on small businesses, consuming valuable

time and resources as businesses attempt to decipher their laws affect on them. most of the businesses have less than 50 full-time employees and would not be consider applicable large employers. large depending on the calendar month and whether our lips later is in perth -- is in session. based on my understanding of the aggregation rule, we will be considered one employer under the law that is applicable large employer. this is the cost of doing business for each of our companies will go up. restaurants operate on thin --gins, forcing operators to austin, texas remains one of the strong economies in the country. since the recession we have tightened our belts to manage rising costs and we are still very much feeling the impact,

including double-digit health insurance -- double-digit health insurance premium increases. it puts pressure on our teams, allen i vendors, on our pricing -- on our vendors, on our pricing. in addition to the aggregation rules, there are several other sections of a lot of impact restaurant operations and similar small businesses. -- of the law that impacts restaurant operations and similar small businesses. the restaurant and food service industry attract people seeking a flexible work environment, whether they are students between careers or just looking for a second job to makes ends -- to make ends meet. there is a significant movement. given the short term nature of individual employment, the administrative urban of educating and processing the enrollments prove almost as expensive as coverage itself.

absorb thiscannot cost and ultimately the cost will be warmed by the public as a whole. the implementation also threatens the safety haven of a flexible work environment by those that work on it. inc. you again for the opportunity to testify today regarding health care law and its effects on the aggregation rules for small businesses like ours. we are committed to working with congress to find solutions that foster growth and truly benefit the communities we serve. >> thank you. our final witnesses donna baker. she is a certified public accountant in adrian michigan. she holds an nba from michigan state university and a ba in accounting. mba from michigan state university and a ba in accounting. >> thank you chairman collins, ranking member alaska's and

other members of the committee. it is an honor to be here to testify on this subject. i am donna baker. my own accounting firm for the last 13 years. practice in michigan, a very small rural area. firm iof owning my own also own a small payroll company. i have invested in a retail store and my husband, who is also with me here today, is a partner in a family dairy farm. heard, the already business aggregation rules require any group of companies to be treated as a single employer. the primary key in determining which company should be combined is either direct or attributed ownership or affiliated services, but not operational control. these rules may cause unrelated businesses held by family members or trust to be aggregated. companies within a control group

do not need to have the same management or even be in the same industry. also, the business aggregation rules are very complicated, as you have heard. they are rarely applicable to small businesses, therefore they are unfamiliar to both small businesses and small business advisors. i have had many webinars in the aca rules. most of the material will mention that the control group thes apply the do not cover specifics of these rules and unfortunately i think that many business advisors that deal with small businesses primarily assumed that control groups means handout controls instead of the actual emphasis of director attributed ownership. have two examples of applying these control groups to to businesses and one is my own personal business, like i said i own 100% of a very small cpa

firm that i often manage along with the payroll company that i manage and i have invested in a retail store, however that is an investment. i do not manage or operate that on a day-to-day basis. husband. of course, my he is a partner with his brother in the dairy farm. have no home responsibilities, i do not make the decisions for that company. but my name is on some of the provide some housekeeping services. based on the business aggregation rules i would have to combine all four of those entities. we are not quite close to 50 employees yet but close. the payroll company is quickly growing. mysecond example is one of clients, an elderly woman who owns 100% of two local restaurants. her son manages and controls all of the business decisions for those two restaurants.

she recently provided the capital for her nephew to open a restaurant in florida, in which therestaurant in florida nephew manages and makes all the decisions for that restaurant. under the current business aggregation rules those three entities would be combined they would exceed 54 employer -- employee equivalents and would be required to provide the health insurance benefits. those two examples illustrate how the control rules will aggregate businesses that are not directly owned by the same person, they do not have the same management, are not in the same industry, and may not even be in the same state. ofrefore, the implications acquiring small businesses to use these aggregation rules could create several negative effects. a could hinder growth and discourage owners from hiring employees, they can create an environment where the owner trades or manipulate percentages of ownerships or minimizes their employees and keep some within

the early hours and keep them under 30 hours. itcould discourage small -- could discourage is this owners from investing in other and the additional costs could make it difficult for them to compete in those industries. like to mention the increased costs of my own plan. i do provide basic health insurance for people in my county and in my payroll company. this policy has been canceled would belosest policy a 44% increase with reduced benefits. it would have higher co-pays and higher maximum out-of-pocket instances -- out-of-pocket expenses. these increases would be difficult to absorb. thank you. >> ms. baker. i would like to start by stating the obvious. it is hearings like this that

oive us all an opportunity to obtained test money on the record that will highlight consequences intended and unintended. as we move down the road and look at potential changes that we need. the obvious, we all need a lot more jobs and the economy. the economy is kind of languishing today. ise jobs is what everything about, getting the unemployment down, increasing payroll across the country to drive the economy. clicks i will join you in supporting legislation -- >> i will join you in supporting legislation for passing the jobs bill. to passneed is legislation to create jobs and we're just waiting for the leadership to do so. >> i can appreciate that. it is jobs -- we may disagree on

what stimulates jobs. i believe lower taxes and less regulation and less government interference would have some other questions to indicate the impact of the aca. today -- i have heard again, i am a small business guide. -- business guy. her growth requires capital. growth requires capital. any dollars wasted on regulatory burdens, such as business aggregation and hiring a tax expert, is a dollar that is not available to invest in growth. briefly, we have a lot of members to ask questions. just to reconfirm, i think i dord it in your testimony, you think this business isregation rule, as it currently written, would have a

negative impact on the jobs and economy, hindering job creation and growth and therefore should >> i -- should be altered? think anytime you have a bright line test it is going to hinder people that do not want to cross the bright line test. in this case it is going to ,inder hiring, hinder expansion and the grow or die -- they are just going to choose to stop growth and perhaps move over to business, other ownership. so, yes. >> thank you. yes, mr. chairman. the provisions do hinder job growth and they do hinders wrong job growth. thatat, i mean the jobs could be created in the future would instead be part time jobs. advisors on the

this topic have their own bag of tricks. it is impossible to stay outside of compliance with respect to each individual employee if you can keep that individual in a part-time position. full-time jobs are absolutely necessary. you cannot serve two masters. it is hard to have courted on the part of the employee, much less the two separate employers. strong job growth is necessary. of course, there are other issues involved, as well. i agreed the funds that are spent to analyze the issue and to comply are extremely high. cost,not just the initial it is participation every single year in the premium payments. >> doma. .- thank you >> what we are seeing now is people have less insurance than have had insurance, it is the refers effect of what we were

hoping to achieve here. what weeverse effect of were hoping to achieve here. triede 30 hours been around the country, and i think that is extremely negative for the country, negative for the .mployees some groups think that is their only option. in the long run i think it is not healthy for our economy. >> thank you. >> yes, i do. there are a lot of concerns with that. i am also concerned with those that have the true entrepreneurial spirit to be discouraged from investing in more small businesses and expanding in other areas. that would definitely hinder -- >> one more quick question and i will yield to ms. velazquez. we are focused on the business aggregation rules but we are talking about other issues.

aboutnly we've talked employees getting their hours cut under the 30 hour rule. look for messages that can be made him i would like to ask you if you think the 30 hour definition of full-time should be increased back to 40 hours. >> yes, it will prevent the people from ratcheting down workers to 30 hours and leave them at 40. yes. >> yes, i do. >> yes, absolutely. >> very sustained. that's very sustained. succinct. under obamacare, this arbitrary selection of 50, defining a large corporation, does not fit

with the burial spirit. -- with the entrepreneurial spirit. do you think we should increase cost that of fte would trigger the affordable care act? andou believe 50 is too low we, as congress, should increase it to a number higher than 50. you need the facts and circumstances test on who has the today control. if you increase it to 50, the same thing happens beyond 50, 200.er it is 75, 150, the 30 hour rule, i believe increasing the number would alleviate the number of issues. it is a legislative fix.

there would have to be a change to the statute itself. comeshink the challenge in that every industry cannot be put in the same box. of any the evaluation organization that tries to encapsulate multiple industries, there are always different materials for the industries. with a at an industry , iewhat mobile workforce think the costs are going to be significantly higher for the same number of employees, the same number of ftes, as it would for a larger workforce. >> thank you. >> yes, i think that definitely would help. itwould make more sense when comes to defining control.

when you do have something that crosses different industry it as additional complications. >> thank you all. i will yield to ranking member velazquez. >> thank you, mr. chairman. attentionke to call to the hearing we conducted here in this committee on october 9, the definition of full-time employee and small businesses. one of the expert witnesses was director for the center of economic policy analyzed who conducted data right after we passed the affordable care act. where small businesses were expecting employer mandate to go did effect -- since then he not find any data that shows that small businesses were not the 30or increasing

hours. when the affordable care act was in effect and when people were expecting this employer mandate to go into effect. the federal reserve from san francisco conducted another research, demonstrating it has not had any effect. , we will any law continue to monitor it and make the fixes that are necessary. my question to the panel of witnesses -- the business aggregation rule -- in your the correctt is balance between preventing abuses and protecting closely ? ld businesses >> i think anytime that you have

a bright line test you are going to end up with abuses because people will walk right up to that bright line and not cross it. so what you have to do is come back and put it into a facts and circumstances test where you apply judgment, i apply judgment, the irs applies judgment, and each person decides based on the circumstances whether there should be an aggregation. >> do you concede that final regulation should incorporate a fact and circumstance test? >> yes. >> that would be a statutory change, however. >> i agree with ms. walker that the facts and circumstances test is a much better standard. again, requiring a legislative change. >> and that would create more jobs? >> i think it would and i think serious consideration should be

given to changing the threshold from 50 to 250 and look at it from an industry basis instead, or perhaps blend the two. are there some presidents for using 250, such as the w-2 payroll? >> i think when you look at the original context that the control group provision was put together for the irs, it was put out there to stimulate the use of corporations and companies growing. using its the way it is being implemented now is the ultimate effect. claritybusinesses need around what the rules are. can need some rules they reasonably work with based on the industry they are in. willi think job growth loosen up. >> thank you. i would like to ask you another

question. when it comes to contracting programs in the federal , and business must meet not only ownership by holding a majority of shares but also demonstrate control over the business operation. can you describe that in your testimony? >> yes, for purposes of the aca ,nd business aggregation rules only common ownership is considered. which, in your opinion, is a better indicator of ownership? >> i'm not sure i really got that. would be control over the entity, the day-to-day operations, the decision making -- thet investment or day-to-day operations, which supports the fact and

circumstance that they have been discussing here. >> i would agree, actual control of the facts and circumstances over the day-to-day operation. that is absolutely necessary for compliance. as i said before, the small businesses do not have centralized payroll, hr. >> thank you. >> at this point i would like to yield five minutes to representative tipton. >> thank you, mr. chairman. i would like us art out with mr. when stanley -- i would like to start out with mr. winstanley. do you file separate tax returns? >> yes. >> are you allowed, since you have a loss on your large tech business and your small software business versus your restaurant -- can you write that loss off

against your restaurant? >> no, they are separate. >> what happened to business aggregation? , there is a significant administrative burden comes -- burden that comes with operating both entities. tothe policy would be able provide the health care. would be able to horseshoe the ability to provide health care. we just heard comment that there small businesses are not hiring as a result of the implementation of the president's affordable health jobsact, no affect on hired. is that your experience? >> no, it is not. >> would anyone else like to comment? >> no, it is not. i see it in small and large businesses. >> businesses are not hiring because of the affordable care act? >> i believe it is draining resources from the companies

that would be otherwise going to grow the business. >> very interesting. we are dealing with theoretical data and real life experiences. i come from role colorado, i am a small business guide. do you have any experience -- perhaps the cpa can address this the best. are you seeing insurance cost differences between businesses and rural areas versus urban areas question mark -- urban areas? in alorado, if you punch role zip code code for your health care insurance you are paying a 65% premium to impair to people who are living in urban colorado. are you seeing those same sort of circumstances? >> i will have to pass that to the insurance person. >> i can address that. that is happening. it has happened because there is

less competition, there are fewer facilities in the rural area. they wantedrge what to charge because that is the way -- >> d you have a little bit of experience with this? lowerit typical to see a income in rural areas than in urban america? >> yes, sir. >> it is. we hear a lot of talk in washington coming out of this administration about income inequality but i am hearing testimony that the administration, through its policy, are forcing you to cut the income for people by reducing their hours tom a we hear the people who are living in a rural america who earn less are going to be paying more for what is now law that you must obey to buy insurance. is that correct? is yes.imple answer >> simple answer is yes. effectively what we are seeing is a citizen that is not affordable.

we can certainly get into the accessibility issues as well. but going back to the aggregation rules that we are specifically trying to address on this, can anyone on the panel give me -- i just want to be able to produce my product, to sell, to my for my family. can you give me two sentences to define the aggregation rule e -- aggregation rule? looks a parent subsidiary group were you own 80% of the .orporations in conjunction 80%. and then the affiliated service group rules, those do not necessarily have ownership that if i provide management services to another business that will be aggregated. that is about as clear as mud. that --le to understand we have had abundant testimony

on this to midi. rules and regulations -- and this is a thing we are talking about today. america killing jobs in and killing hiring prospects, today when we need to hire people. how much more is this going to cost a small businesses working on a narrow topic margin? any idea? >> anytime you look at these in a the city -- the rules situation as complicated as his you are going to need to sit down with a chart. he transfers ownership to children. you are going to have to go through the chart and ask them does the management for the different businesses. ins the software company fact do payroll for the west ron's, those type of questions. then you are going to put it all together. once you reach 50 people, you will have to know -- you will have to comply with the rules. and then he knows which

companies have to be provided minimum essential covering -- essential coverage. >> thank you, at this point i would like to yield five minutes to represent filling. ming. representative -- if i a question heard correctly you believe that fewer people have health insurance now. >> i believe fewer people are accepting health insurance now that it is available to him. >> i'm curious, i know there are a lot of good employers out there who have always divided health insurance to their employees. district where a lot of employers have not always done the right thing like you, ms. baker, and have not provided health insurance to their employees and have taken advantage of many employees around the country who do not

speak english and are not familiar with the rules. statistics have shown that on sunday and monday alone, 29,000 people signed up for the new health care law on the website in today's. i was just wondering what advice you could have given or would give to these employees and small business employers who have not provided insurance in the past. and anyone can answer. >> so, we like to consider ourselves a good employer and we have provided insurance in the past. the nature of it is the cost of insurance has risen drastically in the last few years and most of the young people who are healthy simply drop off the plan, which makes the costs go up even more. so, we have a situation where people aren't even willing to pay for the insurance, despite the fact that we are continuing to increase our contribution.

it has become a situation -- i only know from my own experiences what we are dealing with. i have got to believe there are a lot of other small businesses that are experiencing the exact same thing. if you multiply all of those, the nets loss is significant. >> with the gentlelady yield? i would just like to relate the fact that in massachusetts, when they passed the law and implemented it, the target of the young people who were not theing on -- the target was young people who were not signing on. later on they did enroll in the affordable care act. we believe that type of trend we saw in massachusetts we will be seen throughout the country. answer -- from my own personal situation i am in one of the rural areas with very high health insurance and lower income.

our county has 99,000 as a population. the average household income is $40,000. as i try to aggregate the can standard if i at 50 i will. it will be extremely expensive for me. in the meantime, to absorb 40% health insurance increase, it would be easier for me to put my employees out on the exchange. it is cheaper for them to provide that then for me to absorb that additional cost within my small profit margins anyway. >> i would just comment that the additional cost of adding each employee would be approximately $4000 to provide insurance to that individual at an affordable rate. it may be a smaller figure in some places and higher in others. does that stunt the job growth?

i will say the law itself is having an impact on the cost. we are seeing people not enroll in the coverage that maybe would have and rolled them in the past because the costs are just higher. we do see, and traditionally have seen, individuals and not enroll in the coverage, even if it costs them $20 per pay. it is a matter of individual choice. they look at the coverage and say they would rather have the money. and the bigger context of wages, if people would rather have the money, the affordable care act take that off the table if they have to be offered the insurance. >> thank you, thank you. i would like to yield five minutes two representative luke meyer. >> thank you, mr. chairman. one of the things we are seeing and that you discussed today is the problem with companies

trying to deal with this. i know there was an economist in recently who here has done a small business survey. 76% of the businesses surveyed said they were not going to hire in the next six months. ms. walker, you have mentioned in your testimony here something about not hiring workers at working hours. have you seen this with your practice, that businesses are starting to limit their hours and can you give me an idea of the number of businesses you're talking about? >> what i have seen is that businesses tend to hire new workers at less than 30 hours. and we have to expand, we are going to expand on a part-time basis. one of the other things i saw in a statistic yesterday for slide presentation -- if you go back two years there were six full- time workers hired for everyone

part-time worker. it has slipped down to such as it is one full-time worker for every part-time worker. >> thank you for that. ago youcomments a while made the comment that your company does not write some groups because they may not be a related business. so in your words you are not sure if they would fall under this rule so as a result you back away from it, and my understanding that correctly? >> we are an insurance consulting and brokerage firm. we see the insurance carriers doing that and refusing to write certain groups. some of it may be the confusion among the carriers but they are still exercising their leeway when they can't refuse to write a policy. >> even though they may technically -- if they did the research and dotted their eyes and crossed their keys and qualified -- just the unintended

concern thatnd the they may be noncompliant is enough to back away, is that what you are saying? >> that is correct. smaller entity or smaller subsidiary in one state without the headquarters location. it could not be the location for the insurance contractor as a whole in the back away from it. >> you work with this every day. are all the rules concave now on the president's health care law? >> no, sir. they are not. currently onhave the very important issues of play or pay, the lawyer mandate, were issued in january of last year. we have a lack of final guidance, a lack of guidance on varied industries and employees this the issues. there are impacts and unintended consequences of the rule that

have already been issued that need to be fixed and resolved. and we do not know basic information such as whether we for aet transition relief particular situation, such as counting the employees for purposes of 2015. we are less than a month away from the calendar year on that issue. starting january 1 an employer needs to know. we are lacking guidance and operating in an area of this is what we know today. >> how can you help that company plan with the uncertainty that sort of hangs over them with regards to the rules not being promulgated yet and not knowing of the unintended consequences of what may or may not happen here? >> we like to address that with a five year strategy and we always have a plan b. if they change the rules in any manner we will go in this direction. we do have small business compliance but we do advise many

large employers. not every small employer has access. >> it is always great to have someone who deals with this on a deal he basis -- on a daily basis. experience on how the unintended consequences of sex real people in the real world. how much time and how much money do you spend in compliance with this health care law? >> it has been a very significant distraction from our business over the last couple of years. especially as we try to ascertain where it will go and where things will land. i have spent a lot of time on it. it takes a lot of our energy. >> ms. baker?

i have been flooded with questions and phone calls over the last year with my clients -- there is just a lot of confusion among wondering if they have to start providing the health insurance, when it will be mandated, what they have to do. burdennitely has been a on my practice to try to answer all the questions that are out there. >> and all those man-hours are borne by your business and therefore you are not making any money. >> absolutely. >> umbel very much for your testimony. >> we do have time for another question or two. i will yield five minutes to records and the pond. hanh. representative on >> it would be nice to hold these hearings with the thought that if we did hear some unintended consequences that impact our small business, that

we have the relief of our friends on the other side who would like to work on fixing some of these problems. i get frustrated in these hearings because i know the main purpose is to have more bad stuff -- to add more bad stuff to talk about and attacked the affordable care act. of i would love for this committee to actually work on some fixes. i think we even heard some that mayompromises, make it better. i will tell you, that is not going to happen. we don't have partners on the other side that actually want to look at this law, how it does impact your business, and take any time or effort to fix it. we are more than willing to work with our friends on the other side to fix things that maybe nobody thought about or to have unintended consequences. of members of the small business community, we are for small businesses. of the committees i enjoy when i go back to my district in los angeles, talking

to my small businesses and finding out what we can do to help them out. it is frustrating to know that there was no intention on the other side. -- the testimony you give nobody is willing to work with us to try to fix this law. that -- these business aggregation rules already apply to many aspects of business law. i know some of the small businesses found it a surprise included their compliance as it related to the affordable care act and maybe you can explain to us why it came as a surprise when these aggregation rules already existed and small businesses were in compliance and other .reas

maybe there are small businesses that have to come in contact or in compliance with these aggregation laws for the first and maybe let us know why it was a surprise. and two, what kinds of small businesses are experiencing fat for the first time you go what kind of businesses may be never have to comply with this law >>ore, even in other areas? enqueue. wallnswer to that is that -- >> thank you. -- if aer to that business has not offered a retirement plan and has not offered a health plan, then the analysis simply has not been done. even if the small businesses offer a health plan, there is no analysis.

the small business owner interest for the group that he is covering. there is not an analysis. orone has the ability time authority to sit down from the insurance carrier and work with that employer to determine its side in the control group. the carrier has no obligation nor consideration for whether the rest of the control group is addressed or not. it does come as quite a surprise. >> i think the difference is -- this is aate mandate where as it is providing health insurance, i can provide health insurance to some of my workers and not others. it was all voluntary before. use to criteria will you decide which workers will get health insurance? by job retention? >> driven by the industry.

havefferent industries different types of retirement plans and different types of health benefits. when people say more companies -- be dropping their plans i don't know what facts or empirical data or research will drive anyone to conclude that, in fact, companies will drop health insurance. when we hold hearings here one of the biggest issues that companies and small business rings to us -- business bring to us is to find skilled workers. i am sure in order to retain those skilled workers, if you provide health care as one of the packaged job offers, they will be more than willing to come to your company. thank you. , i wante i yield back

to throw out one more statistics. the national employment report which measures national employment say small businesses led the way in job creation with this november. thank you. >> there is never enough jobs. i would like more jobs. we will cut it down to the wire. >> thank you, mr. chairman. need to be around 350,000 each and every month, we are still devastated and upside down when you look at the workforce participation. because we are up against the clock, i am sure the chairman will hand you some time when you are done. because i have heard the discussion and you explained it

, on the aggregation rules, how different these aggregation rules are in regards to what you're seeing in the new health care law compared to what we do -- have done in the past. can you sort of help explain some of the mechanics and how they are different? >> i may yield part of this question to ms. walker asked to some of the technical issues. of the mechanics are different because the players have not done this in the past, unless retirement plan. unless they were under a safe harbor they may not have done all of the analysis. in terms of what we are seeing in actual real life, i know there has been a discussion of jobs creation and whether employers are hiring or not hiring. you -- iost you and

would caution you on the statistics you do here. many of our clients will not answer the question because they have seen the fallout in the industry, whether it is restaurants or other industries. i am answering and addressing questions like that. >> mr. chairman, one day that maybe a completely different hearing because we have had that happen once in arizona were some voluntary surveys that were filled out turned out being audited the next day. with your background and the cpa we can always turn back to our lawyer friends. let's deal with the reality of business trying to survive. a hearing yesterday of what many of the small banks are having to do to survive and have you started to have clients with smart lawyers coming to you and say, how do we deem the system? do we have to put this in trust,

hide this, hide that. you don't have to throw anyone under the bus, but have those conversations begun? >> most the businesses i deal with, that is the first question they asked me , what do i do to avoid this? >> in many ways, one more time -- as our regulatory society grows our washington, we are going to turn a lot of our friends is friendso a way to -- businesses into a way to game the law in order to survive. >> i advise them not to but that is their first reaction. >> if i remember your testimony, you reached out and invested some of your capital to start other businesses. and yet that may be pulling you

into the business aggregation. does this become a chilling effect on you helping to capitalize new economic growth around you and have you actually been approached on how to game the system? >> it is one more variable to take into account. where do weays stand on this? it is we stand up so applicable. we have to figure it out which is taking considerable resources. we think we understand it. issue is in the distraction from the business. >> just because we are down to about three point five minutes, we heard a lot to this in yesterday's hearing. 3.5 minutes, we heard a lot

of this in yesterday's hearing. the arrogance that we as pingcymakers keep dum on our job creators, at some point we have to wake up and decide this is not partisan. this should be about the people not the vanityd of trying to justify things we have done that do not work. with that i yield back. >> we do have votes. give or takern for 30 minutes and then we will reconvene. we will adjourn. >> the committee will reconvene. i would next, what do we have? thank you very much.

all of you for coming in today and testifying. in your practice, you advise workers. correct? >> do you find this presents a difficult issues? would you discuss some of the situations, please? are you referring to me? >> mrs. walker. >> one of the best examples is the one that donna used. that was an elderly woman who restaurants.in two she invested in a restaurant for her son in one state in a restaurant for her nephew in another state. that required aggregation rules. the other situation was a family

business where they were making investments. one of the investments was a golf course. it was not in the same area. the two businesses have to be aggregated. >> don't we need to have the clerk year? >> are we missing someone? thank you. i guess we will's momentarily. pause momentarily. ok. we can continue. >> thank you. thank you. do you have a tax specialist on

your staff? >> no, not on our staff. >> who would you consult for guidance and aggregation rules? >> we would hire an outside counsel. we have attempted to read them ourselves. >> how much is it to hire someone? >> it ranges. it is very expensive. >> lawyer by the hour? >> right. or $2000?llars it would be significantly more than that. >> $5,000? $10,000? >> maybe more. >> more than that? most powerpoint presentations on the health care law for small businesses do not include

materials on the business aggregation rules. does your company? ? we address the issue. we consistently refer. we are a brokerage firm. we refer our clients to their tax and legal advisors because it is so complicated. they will have a better understanding of any business arrangements they created. it also requires an analysis of family trust, documents that were treated for purposes other than addressing business aggregation. it can get extremely detailed. >> how do small businesses know about these aggregation rules? how do they find out? >> their advisor, if they're working with an advisor -- >> more than $10,000?

>> if they have currently cocounsel or working with a brokerage that raises the issues read about itey on their own. >> forgive me. are you an attorney? >> yes, sir. way i understand attorneys charge is they charge by the hour and that includes research, correct? attorney, if i wanted to know about the health care law, he would have to read thousands of pages of meulations and to be charge by the hour? >> it would not necessarily require him to read the entire file. it would require analysis and experience with the control group rules was a very specific and detailed. that is a very specialized area of the law. >> if my normal business attorney is unfamiliar with

that, i have to go find another attorney. will charge me, holy cow. i see my time has pretty much run out. thank you. >> at this point we will yield five minutes to representative barber. >> thank you for having this hearing. is this working? i appreciate the witnesses testimony. it is helpful to hear from individuals affected by the law. my wife and i ran a small business and our community for 22 years. we know a bit a while that's about what it means to keep doors open into with regulation and taxation -- we know a little bit about what it means to keep doors open and deal with regulation and taxation. all of this is important to me. i wanted to be a member of this

committee to see what we could do to help small businesses be more successful. since i have come here last year trying to have been partner with people on both sides of the aisle to find reasonable fixes. i think there are many benefits. we have realized them with individuals. now we are into implementation with individuals. the benefits are real and the issues are real as well. with any major piece of legislation, over the decades we've always had to make amendments and revisions to a bill of that size. i am clearly interested in learning more about that from you. this and i look at the people back home, i am reminded there are three c's they often talk about. they talk about the aca complexity, that it is confusing

, that it is challenging. to get through that and help people be successful and understand the law. for anyhe same question of the witnesses. if you can make one change or ask one question to be resolved by the agencies that are resolved, what would your top priority be? we need some ideas for witnesses about what we can do. my colleague was asking about what can we do that makes things better. do's talk about what we can to fix things. what would these be? i would position the aggregation rule to fulfill the scope that it was originally designed to fulfill which was

promoting the growth of business. i would treat this separately. it is in context of what they are to position the law to be viable for all industries. mrs. baker? it is hard to choose i imagine. >> it is. i would support looking at a industry by industry, looking at by true control, not by ownership or indirect treated ownership, someone that is making day-to-day decisions. i think the 50 employees is too small. it is too small. the rulesspect to that impact small businesses, i would suggest taking a second look at where they are with respect to the insurance carriers. ofre is not the same level

compliance required of them that would support the mandate. some of the gaps in the law which make it difficult but not impossible for businesses to actually get the coverage would specifically need to be addressed. if i could go off the topic of small businesses. it would be essential coverage. offered, that will be and i and some of you have read about them in the "wall street the skinny plan. they will satisfy the employer mandate. when individuals realize they have covers that is not sufficient but what the law required employers to purchase and provide there will be significant backlash lay none of the backlash we have seen so far today.

i take the same approach. we are looking at the entrance project. the real issue with health care is the quality is not what it needs to be. aca did not focus on quality. there is a lot more that needs to be done there. insurance, the types of insurance, does not make it very easy for people to comply with the rules. >> thank you for your testimony and good answers. >> i think he wanted to have a few questions. youess he will yield to first. >> thank you. for starting a little late. i think the witnesses for joining today. a couple of comments at the beginning, i think it was mrs.

have mentioned the changes would take a legislative change in order to make that happen. i appreciate that perspective. not we have seen is necessary to make the changes from this administration. you got another year. people callw if you. it makes your job tough if you do not know what the rules are or they say they will delay it for another year. we have 10 different areas of the affordable care mandates which is the law of the land. the administration says we are not going to make employers to the reporting requirements. how do you handle it or answer the question when the irs has is finalized rules on this and they could change the rules? a business in kansas.

they were noted in the local theiron july 1 they made changes. they did everything they had to do. what a mistake. on july 2 the president said just kidding, we will suspend up for another year. what is the answer you give to folks? what does a one-year delay mean? it does make it difficult, especially like a small firm like mine. we have limited resources. you take the initiative to communicate everything and then all of a sudden it changes so you reach out and have to re- communicate so the amount of time associated is great. >> other responses? phenomenaleems a amount of energy that is not elseon something constructive.

sayinglooking at it, this is not sustainable with our current business model. some things have got to be done before it gets rolled out so we can feel some level of comfort. hopefully, that is not a pipe dream. >> i've yet to see anything from the white house that they have wanted to make any changes to this act. them multiple times in this committee. have no interest in changing one letter of the law unless it is by executive action. that is unacceptable to me. one thing i would like to ask mrs. walker on is the trend of a part-time economy. do not know iti was that bad. four out of five new jobs are part-time.

for everyone full-time job that is created there are four part-time jobs created. job thatone full-time is created there are four part- time jobs created. it is a pricing to me -- that is surprising to me. flipped. has it used to be six full times 21 part-time. part-time.e >> that is devastating to folks looking for a job, particularly the young people. can you describe a little more what happens in a part-time economy? you are trying to avoid these mandate. say why aren't you providing health insurance for someone working 20 hours? it is costly.

trying to make those demands in an uncertain environment, you have to say you cannot work that much this weekend. it is not just figures. for mys not just figures district. i've heard story after story of business owner saying i will not hire anybody because i'm worried about the threshold. rules arenow what the going to be. i will not take the risk. these are successful businessmen and women. let you know next her. it does not work that way. any further comments? that is a frustration i am hearing. thank you. i would just add it is an issue that is crying out for leadership. leadership in terms of what you're doing here today, what is the truth? what are the facts?

whatg to an agreement of you can agreement on, large business owners want to see some sort of a solution to these problems other than the issues being raised and the lack of a acceptable.ng toneed a group of people step up and say some things have got to change. train go watch the down the track with the bolts falling off. this is our children, young people trying to get jobs, business owners trying to do planning. they are putting off expansions, buildings, all kinds of things that could generate other jobs. work is another thing. it is crying out for leadership.

that is a great start. i would continue down that path. >> thank you. that was a great summary, actually. i would like to yield five minutes. would you yield for just one second? >> yes. it's not -- you are the ranking member. you just strike me, that number, that one out of five jobs are part-time jobs. what was the number? >> for everyone full-time job created there are four part-time jobs created. from the a witness

center of economic policies research that the vast majority of people that were part-time do so voluntarily in many cases. they have family or other make part-timet employment decidable even with a weak labor markets. more than two thirds of the people working part-time report they do so voluntarily. thank you for yielding. know, this is just an observation. of affordable health care act is the law. is the law.re act naturally, there are going to be issues around the implementation. we know the problems we have had. meat of the act i think will revolutionize health care in this nation. look back at other large programs i have been implemented one the course of time,

being social security is probably the easiest one to mention. when it was implemented, it was going to destroy this nation. we were going to socialism. how could we do this? it was going to ruin the administration. most americans think social security is part of the fabric of this country. i see the affordable having the life in this nation. when they start to, they used your name as your identifier. guess what? systemd to tweak the because there were a lot of donald paynes and mrs. bakers.

nothing is perfect when it starts. you have to let it evolve into something that will work. i like to use that example. it is probably the easiest example to use in terms of rough starts for large programs that are successful over the course of time. baker, you testified that it leaves small business owners to provide health coverage in an industry where it is not the norm. say that setting the norm is precisely what the affordable care act is about. health insurance premiums for small firms have increased 100% -- 113% in the last decade leading to dropped coverage. it easier for small businesses to compete and offer quality benefits. the norm prior to the law allowed insurance companies to

drop coverage for employees when they needed coverage the most and it discriminates against people with preexiste ing conditions. the law upsets that norm. prior to the affordable care act, it is normal for a family to pay an additional $1000 for to cover thatle, cost. the affordable care act aims to this this norm to bring into the system to drive down costs. there are issues that need to be tweaked. the bones in the substance of the law are good and here to stay. -- and of the substance of the law are good and here to stay. according to the last census data, less the 1% have between 49th employees, placing them at risk of falling into the abyss

of an employer mandate. that is less than 1%. i'm interested in addressing valid concerns. i really find it nonconstructive to continue to play on the fear of the american people rather than work on ways to make this better and see it implemented successfully. over the course of the last two days i've heard the president speaking before groups in saying if you have ideas, and i believe he is reaching out to our colleagues, that will strengthen the law, then let's discuss it. to try to tear it down and not even allow it to go through its natural courses is counterproductive. solutions, and i am

very open to the criticism and the potential of making it stronger. i am glad to hear your testimony. you mentioned an e-flex. i understand the restaurant industry has a unique makeup. flexibilities -- as the coalition have -- what flexibility does the coalition have in expanding insurance coverage for all? -- whereou see the e flex?u see bthe e-

reference in the regulation? i am not familiar enough with that to speak with it. ,hat i would like to speak to he mentioned social security. to my generation what social security is known for his being a completely unsustainable program. started with a 24- hour diner that had 10 or 12 employees. we stayed up on my building that plays in the building that place and turning it into a real business. there is nothing more we wanted to do to build and add to it. i have had very good advice from people who have done similar things. what they shared with me is that every next step you take is harder than the set behind you. there is a significant growth burden that comes with trying to build a road business. regardless ofes,

what industry you are in, presents an additional hurdle for people trying to build something meaningful. i think it is counterintuitive -- counter to the spirit. hashe gentleman's time expired. they wanted to ask a fire -- follow-on question. health care law requires you to inform employees about health care available to them. is this an additional burden? >> there is a significant amount of education that goes on. kids knows, it is hard to educate someone who's not interested in hearing what you are saying. it has traditionally been challenging for us to educate to the groups of people we were able to provide health insurance

to. i see that as being a very challenge. >> i was back in a district last weekend. i had dinner at a restaurant. the waitress recognized me and was a big supporter. she told me her story. she lost her job and is now working two jobs all because of the health care. she lost and found out about beforeployer mandate they delay that. now she's working two jobs. do you have a lot of people on your staff that are working two jobs? >> we have a significant number of people doing that. there are a lot of people who need part-time jobs. because wage and job growth and permanent full-time positions have not been there while housing continues to increase. >> do you think that is largely dutchuted it to the

the treated to the affordable health care act? >> it is very much influencing. >> mrs. baker, a control group is two or more corporations with sack ownership connected in one of several ways. not small businesses do issue. how would the rules be applied in those cases? >> they look at ownership. a corporation, they look at investment in equities. invested in a small woman's boutique as an manage or, i do not operate on a day-to-day basis. it is part of the rules of aggregation and increasing the cost. even though mr. payne mentioned

the norm, the norm is we would all like to provide health insurance. that is a small woman's boutique. there is very few others that would have to require health insurance because they are small businesses and not meeting the 50 employees. for me to provide health insurance to them makes me not competitive. just because i am an entrepreneur. >> let's see if we can sum up, higher deductibles, higher premiums, additional legal costs , tens of thousands of dollars for a small business, and you are less competitive. thank you very much. >> at this point we will call the hearing to a close. i want to thank all of our witnesses for being here today. it is very timely. some people do forget that even

though the penalty portion for the employer mandate has been delayed a year, the calculation as to whether or not you will have to comply starts in three weeks time. january 1 is the first beginning of what will be 12 monthly of keeping track of hours and employers to see if you hit it or not. it is a very timely situation. we certainly have heard a lot of give and take. there will be changes that will .e needed in this law hopefully, the president would agree to make some changes. he has not recognize that. an overwhelming number of americans are expressing displeasure. compliance with the law and application is a burdensome and

is confusing for business. it almost goes without saying that a big government, one size fits all that tells a business what benefits they have to offer is in fact a drag on the economy. hearing this highlights another example of the unintended consequences of the therdable care act, minnie high cost of hiring a cpa or other tax advisors to give , moneyon the rules better spent on the creation of jobs. we will continue to closely follow the continuation of this law. i would ask unanimous consent that members have five legislative days to submit statements and supporting materials. to >> i just would like to thank

all of the witnesses. it is a breath of fresh air to hear that we are just talking ways to improve the implementation of health care. it is great to know finally that we're moving beyond repealing obamacare to finding common ground to make it work. thank you. >> thank you ranking member velasquez. with that, this hearing is now adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2013]

>> turning out to nelson mandela . services are being held for tuesday with a memorial service in his hometown as well as a funeral service on sunday. the associated press reports tens of thousands are expected to participate. president obama, george w. bush, bill clinton are all expected to go to south africa next week. in london, the british house of commons will pay tribute to the leader on monday. david cameron is one of the expected speakers. we will have that live at 9:30 a.m. eastern on c-span2. ate remarks from john kerry the form which is hosted every year at the brookings institution. it focuses on u.s./israel relations and challenges in the middle east. yearss a look at his 10

so far at the state department and the overall foreign-policy challenges that the obama administration faces. we will show all we can. is the policy director to talk about foreign policy challenges. welcome. they are reporting that they are talking about details. you concerns about the deal overall? guest: they are working out the devils of this plan. this is a line is deal we could have done a lot better. under that deal, the united states is starting to dismantle international sanctions. iran is not dismantling a single

centrifuge. it is not starting to dismantle the heavywater reactor which a once called al plutonium bomb factory. sanctions andving spring of $7 billion to as much as $20 billion in the financial assets as well as exports after chemicals, the automobile industry and other things. bringing up a lot of money. it is not clear the concessions we got are really worth that. you have seen them move as early as last week.

movement inno real terms of really constraining it, the sanctions might kick in. think they will bring this? >> part of the reason why they are right is that they are trying to come up with an approach to sanctions amid this and is nots workable completely undercover -- and that it creates the right one for iran to have this. this is a real problem. it is not clear when the start date is. it was introduced in late november. others are going to the hannah to hash out the details. what is the start date?

that shereporters dodged the question. it is not clear when this starts. >> we will show you some of the details. as far as the transparency, how what they are producing as far as uranium is concerned? this is like the nuclear irs. they are required to declare the nuclear materials as well as nuclear activities and equipment. iran failed decades to declare, head and a host of nuclear activities and equipment . just like the i or s has to confirm the correctness and

trying toss, they are find the correctness. they cannot confirm that these are exclusively peaceful. as to what additional expections there are, they are slightly more intrusive at the enrichment facilities. this is bill in the mountain. they have not given immediate access so that they can confirm that they are not hiding any activities. iran has cooperated for enrichment center fuses.

there is worry there may be other hidden activities. this is why a lot of people are really concerned about this deal. >> here are the numbers. you can tweet us. what should these concessions look like? iran needs to start dismantling the nuclear weapons capability. they roll back the number of centrifuges. they have 19,000 installed center fuses. they had roughly 3000 or 5000 installed. in top of that, enriched uranium.

this is the way to weapons grade. today they have roughly 7000 kilograms of 3.5%. 20% that is 9/10 of the way to weapons grade uranium. each percentage point is easier than the last. it is easier the higher up you go. i think the plan should have rolled back. i should have shifted to a foreign company like turkey. the stuff was out of here. reactoronium producing needs to be thrown. this is a 501(c)(3)

organization. eric used to be the ambassador to turkey. he is now in newark. our mission is to promote u.s. leadership and engagement in matters of security, prosperity, economics. we do these in multiple ways by educating and engaging the public as well as publicly -- policymakers. it is empowering folks to really do with these issues. call is from ohio. go ahead. >> >> good morning. this is regarding policy.

i had a comment i first wanted to make. physics and common sense have proven that building seven in new york city was brought down with explosives on 9/11. this is the basis for our policy. why should american citizens headsfficials and talking refuse to take this seriously? >> thank you for your question. i disagree with your question. 9/11 was an inside job done with explosives. there are other studies out there and it is pretty clear that the buildings were attacked by planes that were hijacked by al qaeda operatives. continuinge is a

committee out there that thinks this is some sort of nefarious being. it is hard to take those things seriously. i encourage you to go out there and engage in the debate. i do not think the conspiracy theories really hold water. >> let's say they have a nuclear bomb. would they do about it as compared to pakistan and them having a nuclear bomb? what will the rest of the world do if they say they have a bomb today.

>> that is an interesting hypothetical. there is a decent amount of confidence that they have not created a nuclear discloses -- explosive device. the general belief is that there is still time. iran tostill time for get a nuclear explosive device. those who are constructive critics of diplomacy and whichre want a deal in iran meets the standards of the security council resolutions, , and offersocessing unfettered immediate access so inspectors can confirm that there are no hidden undeclared activities. if iran were to make such an announcement, it would be a huge problem.

countries like israel and saudi arabia are very concerned about iran's noncompliant nuclear activities. it is not popular to talk about israel. you have seen officials leak withes about having talks israel planning for potential military action. nations are in the region. they really need to live up to the security council resolution. it allows for zero processing. >> this is to the corporation

counsel, an organization with the energy rich kingdom. this comes during a trip. guest: hagel is doing damage control. secretary kerry was there the last couple of days to have consultations. many are worried about the -- many are worried about the missile efforts. states isy the united building up system, basically a missile defense system to protect the u.s. against missile threats from both iran and north korea. a lot of our friends and allies

and partners in the middle east either currently have the things and want more of the things or do not have them and want them, and that is why hagel is out there to make sure that despite the controversies of the geneva plan, and it is controversial, that our allies and partners do feel more assured. it is an open question to see whether they genuinely are assured. host: jim from california, good morning, you are on. caller: the zionist think tank that put us into iran, and we got support for israel -- guest: jim, thank you for your comment. i am a former u.s. congressional staffer. i take personal offense that i put any foreign country interest over u.s. interest. it is easy to smear someone. i am trying to engage people on the issues. i encourage you to call back at

some point and ask a substantial question, but thank you for your call. host: you are asked what is the motivation for france, russia, and china to support this deal? guest: they have different motivations. russia would like to see some restraint of the iranian missile threat because it provides them the opportunity to argue that the u.s. does not need to continue with the u.s. missile defense operation with europe. france joined the npt in a 1992 and has taken a strong view against nuclear nonproliferation, stopping the spread of nuclear weapons making abilities. france's foreign ministry has a very active nuclear exporting factor. but a lot of people there really want to stop the threat of the bomb. i think you saw the french foreign minister was pushing very hard to make sure that the

deal in geneva struck a plan. i think he won a long way in making it a long way, but the geneva plan could have made it better. host: is oil from iran part of the interest? guest: the issue that a lot of countries would like to buy iranian oil, and there are a lot of countries, especially the consumers would like to see even one of these sanctions on iranian oil. the u.s. ally, japan, has shut down all of their nuclear reactors, so they are extremely dependent upon a middle eastern oil. they would love to buy u.s. shale oil and natural gas, but we're not quite there. we're moving toward exporting that, but a lot of countries would like to be able to buy oil. but they are respecting current u.s. sanctions. they cut severely the amount of oil they buy from iran. this supports those who actually do by iranian oil at unrestrained levels such as china to actually be greedy and argue for lower prices for their oil.

this is how iran has lost money because they're having to sell oil below market prices to find buyers. i think that a lot of oil companies are beginning to explore the options of resuming business in iran, but a lot of members in the senate have worn these oil companies not get to far ahead of the game because it is still tentative. president obama claims he wants to keep the core sanctions on iran's oil, energy, financial sector in place until there is a real comprehensive agreement. at issue is -- sanctions are like a brick wall, and hopefully we are just taking the top of breaks off. with a big break from the foundation, the wall of sanctions could crumble. host: next call, atlanta, georgia, sean, republican line. caller: do you believe that eventually iran will get a bomb? guest: thank you for your

question. my worry is that -- it is pretty clear that iran has the capability to make a nuclear weapon, based on its declared capabilities. it could do it anywhere from six weeks to two months. now, what complicates things is that if it has undeclared capabilities, for example a hidden enrichment facility. bear in mind, in 2009, we found that iran had built a facility inside a mountain. i think the worry is that iran is building up a latent capability at a minimum, this latent capability that at some point in the future, they could choose to use. those in the think tank community are pushing to make sure that whatever our diplomatic and pressure approaches are, that they really

focus like a laser not to stopping iran from getting a nuclear weapon or device, but stopping iran from getting in growing its rapid nuclear weapons-making capability. host: if you are also asked -- if we stop nations from producing nukes, can they buy them? guest: probably not. there have been persistent rumors in the news for years that saudi arabia might try to either "buy" a nuclear weapon from pakistan or allow pakistan to actually place pakistani nuclear forces on saudi territory. in be the same if the u.s. placed its forces in europe during the cold war. we had to make sure we do not get to that point because the more states having nuclear weapon rapid capability to have a bomb or actually have a bomb, especially in the middle east, if you throw in a more nuclear weapons, what is already

volatile turned into a nuclear powder cake. host: brookline, massachusetts, doug. caller: why is it that anytime the subject of iran comes up, c- span sends a member of the form policy or the washington institute for the policy, all these inspired thing takes out what we have to do is look up the board of directors only follow -- foreign-policy initiatives, and we find people like eric edelman, william kristol, for christ?s sake, c- span, let's have a little would have objectivity. host: go ahead with your question or comment for our guest.

caller: yeah, i am wondering why c-span always has people on from organizations like the foreign policy -- host: we got that far, and i said we have a variety of perspectives on this topic, so caller: i don't think you do. guest: nyack was on right after the deal, so there are difference perspectives on season. i disagree with him on a lot of issues, but c-span has given him just as much time to talk and other supporters as opposed to iran. so i think you're complaint is frankly without. host: we have another caller. caller: i just want to know, why is it that when we went into iraq, before we went to iraq, they claimed that they had weapons of mass destruction, and

then come to find out in the end, they had no capability of that or that they did not find any is what i mean to say. and then now, we want to go to iran. i just want to understand simply what is the reason for is going there? guest: thank you for your question. to be clear, no one seriously is suggesting that we do any ground invasion ? la iraq of iran. what we have is a debate of u.s. policy over the balance between diplomacy and pressure on iran to try to persuade it to run back its capabilities to make a nuclear weapon on short notice. it is a demonstrable fact that iran has things like centrifuges. it is the fact that iran has stockpiles of enrich uranium, one part of its stockpile, 3.5% uranium, 7/10 of the way to weapons grade uranium. a 20% stockpile, 9/10 of the way toward weapons grade uranium. we have a nuclear sort of damocles. it is hanging and it could drop. my organization and others out there are trying to engage with

foreign governments to try to get a constructive soup -- discussion along the lines of the you and security -- u.n. security council resolutions. host: here is john from new york, republican line. caller: i would like to ask the guests about u.s. foreign-policy posture all over the world. it seems that the u.s. is leaving parts of the world to other actors such as russia in the middle east, and our allies around the world have less and less trust with u.s. to back them up in a situation where

they get in trouble with one of these other actors like china is missing in defense identification zone that they're setting up. south korea and japan, for instance, had their airlines say that we will not respect that zone. the u.s. told airlines to respect that zone the u.s. all over the world where they back down, now they are backing down in china, and putin is trying to re-institute the soviet union. all over the world the u.s. is backing down in every situation. can you explain that please? guest: john, thank you for your

question. i will talk about two things. i will talk about syria and then china. you raise two important points. over the last year or so with syria, the assad regime has used chemical weapons repeatedly, most recently august 25, killing many people. the u.s. immediately responded not with invasion but with standoff strikes to signal that this is on example president obama decided to move for authorization of military force, delay the debate over it. kind of made a halfhearted case about it. a lot of folks thought he really did not want to do this. there is still a belief that president obama just does not want to get involved in this area period, which is fine. but the problem is if you draw a red line very publicly that the

use of chemical weapons was -- the good folks at the opcw, the international inspectors for chemical weapons, they implement the chemical weapons convention, they operationally destroy, they just -- they render it inoperable, things like mixing production equipment, filling equipment for chemical munitions. the fact of the matter is that there are still a lot of chemical munitions, weaponized munitions on the ground, as well as delivery vehicles in syria. that is a grave threat. the timeline for destroying the things in the middle of 2014 is a lot of people do not think they will be able to meet the timeline. the current plan is that foreign countries will have to use their ships to take these chemical weapons, the weaponized munitions, move them to a third counpo